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Invest smarter Investing

Meet Jean-Francois Goyette, CFA, Moka’s Portfolio Manager

If someone wants to start investing, what’s the first thing they should know?

It’s never too late to start investing; the best time to start is today. And you don’t have to be rich either! Nowadays, there are plenty of options available (like Moka!) that will help you invest your savings, or help you save to invest for the long term, without prior financial knowledge.

That said, you should still get familiar with things like general terminology, account types, and how to read a statement, in order to make better decisions and understand what’s happening with your money. 

What do you need to get started?

You need an internet connection, a few dollars, a few minutes … and patience!

We always hear about risk. How can a first-time investor manage risk?  

First, you have to ask yourself how risk tolerant (or risk averse) you are. How would you feel if your portfolio lost value, how would you react? Can you afford losing some (or all) of the money you invested? 

Money that will be needed in a short period of time should be invested in conservative investments.

Also, don’t put all your eggs in the same basket, diversify your portfolio, and don’t chase “get rich quick” schemes. Remember, if it’s in the news, the opportunity is probably gone already! 

Professional money managers are broadly unsuccessful trying to time the market. As the saying goes: Time in the market is more important than timing the market. And don’t trust your brother-in-law who’s bragging about making a fortune investing in meme stocks; he’s most probably not mentioning those other times when he lost money! 

How can someone decide how much to invest?

A general best practice with budgeting is to save at least 10-20% of your monthly income, but you should really save as much as you can, keep some amount for an emergency fund, and invest the rest of it. When retirement comes, you’ll thank yourself and appreciate the wonders of compounding returns! 

If you’re not sure if or when you’ll need the money, there are different options that let you withdraw it whenever you need to without penalties, so don’t let it sleep in your chequing account!

What impact does inflation have on investments?

For starters, inflation is the rate at which the price level for goods and services is rising, generally as a result of the value of a currency falling, but also as a result of supply/demand forces. It’s most commonly measured by the Consumer Price Index (CPI). In general, too much inflation will be a drag on the economy.

Inflation can be positive for those holding tangible assets, like real estate or commodities, since it raises the value of those assets. However, higher inflation will harm savers because the purchasing power of the money they have saved will erode over time. As such, securities with fixed, longer-term cash flows like bonds will tend to underperform in a rising inflation environment. On the other hand, it can benefit borrowers, as the value of their debts will shrink over time, on an inflation-adjusted basis.

Stocks are considered to be a good hedge against inflation, as its effects are priced into stock values, although this won’t be true for all sectors of the market. Investors wishing to protect their investments from inflation should also consider other asset classes like gold, commodities, and real estate investment trusts (REITs), that can benefit from rising inflation.

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How to prioritize your savings goals

A down payment or a new car: which takes priority in your savings plan?

Canadians often have complicated, even competing, financial goals. 

Saving for retirement, a down payment, this year’s vacation and a new couch? If you’re struggling to do any of these things efficiently, you’re not alone. 

Assigning priority to our savings goals—and designing saving strategies to complement this priority—is no easy task. But it’s necessary if we want to reach our goals as quickly as possible. Here are a few tips to help along the way.

For the purposes of this article, we’re assuming that you don’t have any debt to pay off. If you do have debt—that’s OK! Everyone’s situation is different so it’s important to do your own research and make decisions based on your personal circumstances. That’s the smart thing to do anyways—you know your finances best!

Determine the cost of your goals

The first step? Figure out the cold, hard facts.

Want a new car? What is it actually going to cost you—payments, interest, insurance, gas and all? 

Maybe you want to go on vacation. Think big picture: a trip to Paris is going to cost more than just a plane ticket, hotel, and a pass to the Eiffel Tower. You’re going to need transit fare, a budget for dining out, and probably some extra money for souvenirs. Oh, and don’t forget the exchange rate!

What about purchasing a home? Maybe as a first time home buyer, you’re eligible to purchase a home in Canada with only 5% down. But is that worth it? You may be charged more in interest over time, or face greater penalties if you default on your payments. Is it actually cheaper to purchase with 10% down? 

Once you’ve got the figures—and be realistic here!—you’re ready to start prioritizing.

Rank your goals based on necessity

Next, think about necessity. 

It’s a good rule of thumb to first save for emergencies. If you don’t have an emergency fund, you’re vulnerable to sudden expenses like a broken down car, a leaky roof, or even medical bills. Saving this lump sum first enables you to quickly get onto your real savings goals—with added peace of mind!

Then, thin the herd. Do you really need to go to Paris this year? Honestly—what about next year?

Ranking your goals by necessity is not intended to suck the fun out of your goals. But it’s a simple fact that dividing your income up into several portions for several savings goals will slow down your progress on all of them. 

So, try asking yourself: do I need a new car right now? Yes? Maybe I should move the Paris trip to next year and double down on buying a new car sooner. 

Set deadlines for your savings goals

This tip is probably the most important when it comes to prioritizing your savings goals—and deciding which strategies to use to reach them.

The idea is simple: when are you going to need this money? The answer to this question will determine how much you need to save and which tools you need to use. 

If you’re saving to replace the transmission of the car you use to get to work everyday, you would probably want to allocate as much money as you can to this short-term goal. This might look like re-allocating money from elsewhere in your budget to increase the amount you can contribute this month, growing your principal savings balance. 

If you’re saving for a down payment on your first home, by contrast, you’re probably looking at a couple years of focused, consistent saving. 

In this case, it probably doesn’t make sense to save every single spare penny, leaving no funds for fun, vacations, or other “wants”. You still need to be able to live your life. Instead, you might consider opting into a tax free savings account (TFSA) which you use to invest into low cost exchange-traded funds (ETFs). Investing your savings—even over the course of five or six years—can really contribute to its growth. 

Meanwhile, your retirement fund is also a different beast. If you’re retiring in 40 years, you’re probably going to be counting on the magic of compound interest. It probably doesn’t make sense, therefore, to pour *every* *single* *dollar* into your retirement savings starting today. 

Instead, you may want to find a reasonable percentage of your income to contribute every single month. But because you’re on a much longer timeline, this amount might be lower than what you’d contribute to a medium-term down payment savings account or a short-term car repair account. 

Saving is about strategy

To summarize, short-term savings goals are the least able to take advantage of amazing tools like compound interest, and as such, these probably need more capital contributions up front. The longer the term of your goal, the more you can simply set it and forget it. 

Using these tips and your budget, you can figure out how much money you should be directing into which savings account every month. As always, consistency is key. But being thoughtful about your savings strategy and accurately prioritizing your savings goals is a close second. 

You got this! 

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Emergency fund: Why you need one

There’s an astonishing amount of content on the internet that says you don’t need an emergency fund. But in all likelihood, that isn’t true. No matter how great your insurance is (or how expensive it is!), an emergency fund is always something good to have on hand. 

You need an emergency fund. Every Canadian does. Luckily, these funds are some of the simplest to amass and the easiest to maintain. 

What is an emergency fund?

An emergency fund is a fixed amount of cash that is kept on hand for use only in emergencies. 

These funds are generally saved up only once, and then topped up as the funds are used. They’re not something you contribute to forever.

These funds are intended to pay for unexpected expenses that require immediate action and that aren’t otherwise covered by Canada’s social security net, like employment insurance or medicare. 

Emergency funds are designed to help prevent you from going into debt, or from being unable to pay for something you desperately need. They enable you to handle surprise expenses without tapping your savings.

How much should I save in my emergency fund?

This number is different for everyone, but the ideal emergency fund would pay for six months of your living expenses, assuming you had absolutely zero income during that period. 

This might sound like an intimidatingly large number to save, but once you have it, you can rest assured that losing your job or needing a car engine replacement wouldn’t put you heavily in debt. 

Many Canadians live paycheque to paycheque, and any sudden strain on their finances could jeopardize everything. With an emergency fund, you have a cushion to fall back on. 

To calculate your ideal emergency fund value, add up the monthly cost of the things you need to live, and multiply by six. These items may include:

  • Your monthly food budget, possibly excluding dining out and alcohol purchases
  • Your rent or mortgage payments
  • All insurance payments, such as home, car, health and pet insurance
  • Utility bills, including phone and internet bills
  • At least your monthly minimum debt payments, but ideally, 1.5x that amount as minimum payments do little to actually pay down your debt

If you lost your job tomorrow and weren’t going to find another position for six months, you would need to treat your emergency fund with care. For many Canadians, losing income would require families to rein in expenses.

It’s important to be realistic about what it would cost you to live comfortably but perhaps sparingly for several months and start there. 

What are emergency funds for?

Emergency funds are for expenses you’ve probably encountered before and have had to scramble to manage, or have had to withdraw money from your savings to cover.

These include things like:

  • Insurance deductibles following a car or home accident
  • Dental or eye care which is either an emergency or simply required but not covered by your insurance
  • Big home repairs, like a leaky roof or cracked foundation
  • Deductibles and related expenses for pet health care, like emergency surgery
  • Or even a new laptop if yours breaks and you need one 

Emergency expenses are one of life’s givens (along with death and taxes). The best way to handle those expenses is to be prepared in the first place. Then, when you’re faced with a scary expense, you know there’s money set aside for just that reason.

It’s a win-win. Emergency funds are good for your financial health and your peace of mind.

How do I create an emergency fund?

When saving an emergency fund, it’s important to be thoughtful about your strategy. 

For example, saving up this cash in your chequing account may expose it to accidental use. Therefore, it’s important to find a safe place to keep it (not in your mattress or a hole in the backyard, though, k?).

You may choose to open a savings account for your emergency fund. When selecting an account, ensure that:

  • You pay very low or no fees, 
  • There are no penalty fees for withdrawing funds at any time, 
  • You earn interest on the money you save.

Here are some more tips on building your emergency fund from the Government of Canada.

Moka’s automatic roundups are another way to help you build your emergency fund and savings. Your spare change is automatically rounded up and invested in a fully-managed, diversified portfolio of exchange-traded funds (ETFs), making saving money easy and effortless. Plus, you can speed up your savings by setting up recurring weekly deposits or multiplying your roundups. 

Once you’ve selected your saving strategy, determine how much you’d like to save every month. Budget for this amount, and be consistent in your savings. With that, you’re well on your way. 

After you’ve reached your desired amount, you may choose to reallocate your monthly savings to another savings goal. If you use your emergency fund, top it up. Rinse and repeat.

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Spend less

5 ways to spend less online

Over the past few years, online shopping has become increasingly more common. It soared when the pandemic hit, leaving most of us in lockdown with no choice but to shop online.

This massive boost in online shopping has been burning holes in our wallets. For better or for worse, the internet and social media are major sources of temptation. Clicking a link to buy something takes almost no effort, and adding just a few dollars more to get free shipping is even more enticing. So, it’s easy to overspend and lose control of our finances.

We’re here to provide you with a few helpful tips on how to spend less online without totally missing out on all the fun.

Unsubscribe from newsletters and promotional emails

This is the ultimate trap! When it comes to getting emails from our favourite online stores, resistance is often futile. To avoid some of these irresistible-yet-unnecessary purchases, there’s only one solution: unsubscribe from promotional newsletters.

You can avoid receiving these emails in the first place by unchecking the box that says “I want to receive the newsletters” every time you buy something online. Often, the box is checked by default (how sneaky!). This move will help you avoid some of these impulse purchases which are often fueled by sheer boredom. To limit the temptation even further, you can also force yourself to limit browsing online shopping sites to once or twice a week.

Another tip: Set a maximum budget for online shopping (for example, $100 a month) and make sure to stick to it.

Think before you buy

Have you fallen for a new dress? Think that sleek juicer you saw on Instagram will look great on your kitchen counter? Before clicking the “buy” button, give yourself a “cooling-off” period of several days (or even several weeks) to make sure you really need whatever has caught your eye.

Why this works: if you’re still thinking about your potential purchase after a week and are sure you really need it, indulge yourself. If, on the other hand, the dress or juicer that got your attention has left your mind, it’s probably not worth it. Over time, you’ll learn to distinguish compulsive shopping from buying that arises out of a genuine desire or need.

Make a list of your needs

Consider jotting down all the things you really need in a list. For example, new running  shoes to replace your worn out ones, a dress for a friend’s wedding, noise-cancelling headphones to better concentrate, etc. This exercise will allow you to understand exactly what you need so you can better understand the difference between essential buying and impulse buying. 

Learning to make this distinction will not only give your wallet a break, but is also a better choice for the planet since you’ll be cutting back on mindless consumerism—which leads us to our next point!  

Choose second-hand items

If you need something in particular, consider buying it second-hand. The second-hand market is booming, with an estimated value between 35 and 50 billion dollars. Many brands are getting on board by launching second-hand online platforms, and almost all sectors are getting in on the action: clothing, electronics, smartphones, furniture, etc.

Not only does buying second hand save you money and increase your purchasing power, but it’s more sustainable and better for the planet. By buying previously-owned items, you’ll still get that great feeling you get when shopping online, but with a less harmful impact on the environment.

Take advantage of cashback programs

What’s cashback? Cashback refers to getting a commission after making a purchase (usually online). Basically, the more you spend, the more money you get back. Some cashback sites, like Rakuten, offer commissions of up to 5% of the purchase price. Once the payment is made, the cashback is transferred to a dedicated fund. If you make large and/or regular purchases, cashback is definitely worth it!

Additinatelly, more and more banks now offer bank cards with cashback advantages, which allows you to earn a commission on purchases made with specific brands. 

Moka also offers cashback through Perks, where you’ll find deals and offers from brands you love, like Apple Music, Uber Eats and Indigo Books & Home. Just make sure you shop through the Moka app and the cashback will be deposited in your original Moka goal and automatically invested. 

Cashback shouldn’t make you buy more, but it’s a welcome bonus that makes shopping online slightly more affordable.

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Managing debt: Where should you start?

When it comes to tackling your debt you might find yourself wondering, where to start? This is totally normal! It’s easy to feel overwhelmed but with a few first steps, you can create a repayment plan that will set you on course to becoming debt free. 

The first step is to list all of your current debts. This includes not only your loans and credit card balances, but also your unpaid utility bills, phone bills or even a loan you took from your cousin’s neighbour’s colleague months ago. 

Having an overall picture of your debts ensures that you don’t forget any creditors when creating your debt repayment plan.

The next step is to determine your ability to repay your debts. To do this, you need to analyze your budget by listing all of your expenses, and whether they’re essential or discretionary. This will allow you to see how much you have left each month to pay off your debts comfortably.

Finally, prioritize one debt at a time, this way you can  focus all your efforts on eliminating them one by one. You should still continue to make your minimum payments on your other debts during this period so that they don’t affect your credit report.

This leads us to our next question…

Which debt should you prioritize first?

You should always prioritize the debt with the highest interest rate, since  they cost you the most. 

It’s important to know that your debt payment is broken down into two parts: one part of your payment is the interest payment, which goes to pay the interest fees, and the other is the capital payment, which pays the principal (the original amount borrowed). The higher your interest rate, the higher your interest payment will be, and the lower the capital payment to actually pay down the principal.

Note that the principal payment is your real payment toward your debt. So, when the interest portion of your debt payment is higher than the capital payment, it will take you longer to pay off your debt. That’s why higher-rate debt should be tackled first.

If you’re deciding between two debts with equal rates, choose the one with the smaller balance. Remember, paying off debt isn’t  a sprint, but a marathon. You need to break down your ultimate goal of paying off debt into smaller goals to keep the motivation you need to get through your plan. That’s why paying off your smallest balance first (when the rates are equal) will motivate you to keep going.

If you have multiple high-interest debts, it’s recommended that you use the Avalanche strategy to accelerate your debt payment. With this strategy, any time you pay off one of your high-interest debts in full, the freed-up money that would have been used for that debt payment is allocated to the payment of your next highest interest rate debt and so on. As you pay down each debt, the extra money will increase over time, which will help you get out of debt faster.

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Rent and food: How much should you be spending?

Here, we take a look at how much you should really be spending on rent and food and what you can do to lower these fixed costs.

How much should I be paying per month on food? 

Eating. Groceries. Cooking. We all have a love-hate relationship with food for a myriad of reasons. Planning your next meal can sometimes be fun, while other times, not so much. No matter how or where we consume it, we’ve all wondered: am I spending too much on food?

There’s no one size fits all answer to how much should be spent on groceries since how much food you need varies from one household to the next. Your food needs may be different from those of your neighbour: for example, a family of two adults and four children will have different needs than a person living alone.

The Credit Counselling Society estimates that you should spend between 10 to 15% of your budget on food. This means between $4,000 and $6,000 per year for a person earning $40,000.

If you feel that your food expenses exceed this percentage, here are some tips to help you spend less in this category:

1. Cook in large batches: This not only saves you time but also prevents you from wasting food. You also avoid buying pre-made meals during your busier times.

2. Avoid pre-made meals: Cooking for yourself is not only healthier but also better for your wallet.

3. Shop around for specials: Always be on the lookout for price reductions to save money. To do this, try using the Flipp app, which scans local grocery store specials every week.

4. Avoid processed foods: These are generally more expensive than raw foods. It’s also  better to chop, grate or grind food yourself to save a few bucks.

5. Plan your meals for the week and make a list: Having a plan will help you manage your expenses and budget your grocery spending. 

Am I paying too much for rent?

Housing expenses (rent, utilities etc.) are a significant part of everyone’s budget, so it’s important to pay close attention  and how much you’re spending on them every month. 

Rent prices vary from one city to another. For example, the average price of a one bedroom apartment in Vancouver is 2,100$ per month, compared to 1,350$ in Montreal. So, be sure to use comparables with the options offered in the same city.

To make your search easier, try using Zumper. It’s both a search tool for available apartments and it analyzes their prices.

If you think you’re unable to find an apartment or rent price that fits your budget, you can  always try house hacking: find a friend,relative or  colleague to share your apartment.

This will not only reduce your rent costs but also allow you to split other bills, like heating, electricity, internet—and even some grocery expenses.

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Make a change: Tips and tools to help manage your money

Remember, everyone’s personal situation is different, so the approach you choose should fit with your financial situation and life stage.

How can I manage my expenses?

Managing your expenses is a first step to achieving your financial goals. Understanding where your money is going will help you get a handle on what changes you need to make to ensure you’re living within your means and making your money work for your future.

To start, creating a spending plan is a useful tool to manage your expenses. To do so, you’ll need to track your spending so you can figure out where your money is  going every month. For a typical household budget, spending items are usually categorized into necessity expenses (essential expenses, like food) and discretionary expenses (non-essentials, like eye cream). 

Note that the non-essential expenses are the ones you can better control. The easiest way to reduce them is to do so gradually while balancing your quality of life.

Once you get a handle on  your spending habits, it will be easier for you to define your spending goals and set a  limit for each expense category, with the goal of  having cash leftover in your budget every month. 

You should also include a savings allocation in your spending plan to make sure that you don’t spend all of your money.

Once you’ve organized your budget plan, you should re-evaluate it every month to make sure that you’re on track.

Budget managing apps

There are a lot of apps out there that can help you manage your budget. They all have different methods and functionalities, so it’s important to understand what they offer and which features are most important to you.  

First up, we have Mint and Fudget. Both of these apps are free and user-friendly.  They use the estimated budget technique: at the beginning of the month, you estimate your expenses for each category. You then follow the monthly evolution of your estimated budget with what you’re actually spending and make adjustments as needed.

Mint also allows you to import your bank transactions automatically, making it much easier for you to manage your finances all in one place.

If you’re willing to shell out a few bucks, YNAB is also a great option for managing your budget. Just like Mint, it automatically imports and categorizes your transactions. The difference between the two apps is in the budgeting technique: YNAB uses an envelope method—a time-tested technique since before the invention of the computer!

What’s an envelope method? We know you’re at the edge of your seats so we won’t keep you in suspense: with the envelope method you assign  a job to each of the dollars you earn. By doing this, you categorize your available money instead of basing it on the money you think you earn. You then spend according to the money you have available.

As added value, YNAB also offers educational content such as podcasts and blogs, so you can keep learning about how to gain control of your money.

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Get to know Cloé, Head of Customer Success

Cloé comes from a small seaside village in northern Quebec. At 16, she moved to Montreal to pursue her university studies, and she’s been calling the city home for the past 15 years.

Cloé has been with Moka since 2016, and her current role is leading the Customer Success team. Her main mission is helping users have the best possible experience with the Moka app—she’s also the one who sends you those friendly Moka emails and wishes you a good day! 

Why did you decide to join the Moka team?

I had moved to Australia for 2 years, and when I returned to Montreal, I was looking for a new job. I met Phil Barrar, the founder and CEO of Moka, through a friend. At the time, the Moka team was only 4 people, and the app was not yet available on the Apple Store and the Google Play Store. I was the person Phil was looking for to handle all aspects of the client experience. Now with so many years of experience at Moka, my role is constantly evolving.

How were the early days at Moka?

I arrived during a period of high-growth. The team was in the same building and floor as they are today, but in an office at the other end of the hall. They worked in the same offices as their incubator, in a collaborative space where they could exchange and share their ideas with other start-ups.

How was your experience working remotely during the pandemic?

My partner and I bought a loft a few months before the start of the pandemic—an old factory that had been converted into apartments. We had plans to renovate everything and to move in afterwards. Then the pandemic hit, and the loft wasn’t close to being ready for working from home. Picture a completely unfinished loft without a kitchen table, me working from the sofa, and dust everywhere! 

Needless to say, it was a challenge for a few months. Like so many of us, we made the best of the situation, and today I have a great home setup.

What do you love most about your  job?

Many things make me happy working with Moka, but the main thing is having a positive impact on the lives of our users; namely, helping them invest when they didn’t know it was possible.

Are there any differences between French and Canadian Moka users?

Of course, the French and Canadian cultures are different. Canadians tend to be more familiar with the stock market, and with the concept of investing. The launch of Moka in France was different because the product had to be more informative and educational.

There are also some notable language differences. Both Quebec and France have French as the main language, but each country has its own unique expressions. Sometimes, the Customer Success team learns and teaches new expressions to our users!

What qualities are essential for your  role?

Being comfortable with the unexpected and with change are key for thriving in the world of start-ups. I have good listening skills and am empathetic, as our team represents the voice of the users. You have to be able to put yourself in their shoes and understand their point of view in order to offer them solutions.

What is your #1 financial goal?

I want to move. Because of the ongoing pandemic, my boyfriend and I have realized that a loft isn’t ideal for working from home.

We hadn’t planned on staying in the loft for a long time, as it was intended for a short, transitional period. But the pandemic changed our needs, and we’re now looking for a larger place where everyone can have their own space to work in peace.

What do you do to save money on a regular basis?

Like so many young adults, I didn’t realize the value of every single one of my expenses, and like so many people I struggled to save. Every month I paid my rent, bills, and necessary expenses, and only after did I save any money that was leftover (if there was any!). But now I’m  much more diligent! I allocate part of my pay each month as soon as I receive it into several investment accounts, including my Moka account. I don’t even have to think about it anymore because it’s automated.

What goal(s) did you achieve with Moka?

My first goals were travel goals, and I certainly reached them over the years! Currently, because of the pandemic, my goal is to build an emergency fund, which I’ve successfully been able to grow. 

What do you do in your spare time?

I’m very fond of yoga, reading, and I love to travel. I also enjoy spending time with my friends, and I’m a big foodie! 🍽 If you have any great spots in Montreal to recommend, don’t hesitate to share them with her 😉

Your favourite must-watch series?

There are almost too many to list! I really liked The Queen’s Gambit, because I found the costumes and the entire storyline very beautiful. Another favourite is The Crown, an interesting historical series on the Queen of England. I also recommend the series Atypical, the story of a young man with autism. For me, it’s both a touching and funny series.

What was your dream job when you were little?

I’ve been practicing classical dance for years. As a child, I dreamed of becoming a professional dancer 🩰

A funny story that happened to you?

I went to Miami with some friends for a music festival. We had a great week partying in Miami and our return flight home was booked quite early in the morning (you can imagine how we felt about this early flight!). Despite all the fun, we still managed to pack everything and have our things ready for the next morning.

We stayed out until 6am (it’s Miami after all!) but still got to the airport on time and checked in our luggage as planned. Once at our gate in the departure lounge, everyone put on their headphones and fell asleep while waiting for the flight. We were called to board but…no one woke up! The flight left without us along with our suitcases. We explained to the agent that we had actually arrived at the airport 5 hours earlier, but still missed the flight. Luckily, they booked us onto another flight home the same day.

The lesson she learned was to always set an alarm if you plan on falling asleep at the gate!

Is there another career that she would have wanted to pursue?


Maybe a lawyer, because what I was doing before Moka 👩🏼‍⚖️ I studied law and worked as a criminal lawyer. I miss some aspects of the job, but criminal law ended up not being the right fit for me. I would potentially be interested in a completely different branch of law, such as information technology law.

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Invest smarter Investing

5 investment myths debunked

We’re here to debunk five of the most common investment myths and—hopefully—make you feel a little more comfortable about investing.

Myth #1: You need to be a stock market expert in order to invest

The stock exchange, which is where stocks, bonds and other financial securities are traded, sold and bought, isn’t well understood by the majority of people. Not to mention the surrounding financial jargon doesn’t exactly make things more clear. With terms like shares, stock market indices and dividends, it’s easy to see why people feel lost. But don’t let the granular details about financial markets intimidate you—investing is actually easy to understand and accessible to everyone.

If you want to brush up on your finance lingo, we recommend this article to help get your bearings. You’ll notice eventually that the same terms are actually used over and over, and that it doesn’t take long to grasp the key concepts. In reality, buying stocks or exchange-traded funds (ETF’s) is easy and accessible to everyone (including those with limited budgets!). 

Myth #2 : Investing is a man’s world

Unfortunately, we’ve heard this before. This is an antiquated stereotype, and the cliché wolf-of-wall-street-representations of investors don’t help. All too often, the depiction of a banker or investor is a man, even though women are just as interested in the idea of investing as their male counterparts.

There is no such thing as a predisposition to invest. An interest in investing is a question of education and culture, not of gender. For this reason, it’s critical to be well informed. What we do know is that women’s investments are on average 1% higher than men’s. The reason is simple: because of their education, women  are often more sensitive to risk, and less quick to make hasty decisions. This type of mindset is actually rewarded when it comes to investing, since investing involves risks of loss of capital.

Myth #3: Investing is for older or retired people

Here’s another investment myth with absolutely no truth to it! Unfortunately, 65% of young people don’t think investing is for them, and 29% of people in this cohort don’t think they have enough money to invest. However, there’s no minimum amount needed to start investing—just one dollar is enough! Whether you are on a limited budget or not, there are several options available to you to help you accumulate money tax-free, such as a tax-free savings account (TFSA).  Many employers are offering a variety of tools that should not be left on the table when it comes to boosting your investment. With the Moka app, you can invest quickly and efficiently with no minimum amount required—all you need is your spare change!

The great thing about investing is that it’s a virtuous circle. Unlike saving, it enables you to obtain a return and to grow your capital. It has to be mentioned that a return isn’t necessarily guaranteed, as there is always some risk involved, but it’s still the best way to generate profits. The earlier you start, the more likely you’ll be able to see your money grow, regardless of the initial bet.

Myth #4 : The funds you invest are inaccessible

When it comes to accessing your money, it depends on the medium you choose. Usually, the funds invested can be withdrawn at any time. However, we recommend that you invest your money with a medium and long-term perspective in order to give it time to grow.

Moreover, studies prove that it’s better to just let your investment grow over time, as opposed to withdrawing your money when there’s a dip in the market. In other words, it’s better to let your money work on its own!

Myth #5 : Investing isn’t worth it if you’re young

Many people will tell you that they’re investing for their retirement, or for their future in general. Those “golden years” may seem far away if you’re only 18 or even 30 years old, but investing at a young age is a great idea.

The earlier you invest, the longer the investment horizon (the total length of time that you have said investment). These long-term investments are generally advantageous because they benefit from increasing profitability thanks to compound interest (the interest that gets periodically added on to interest that has already been accrued). By investing small amounts regularly, you’ll slowly grow your capital. Fifteen dollars here and $30 dollars there might not seem like a lot of money now, but the interest it will generate over many years will surprise you!

So, even if you don’t have any specific projects in mind, don’t hesitate to start investing: in a few years, you’ll probably be glad you started!

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Invest smarter Investing

How to invest with a limited budget

Is investing with a limited budget mission impossible?

If you don’t earn the kind of income you need to build savings, or if you’ve lost your job due to the Covid crisis, you might think investing isn’t for you.

Investing, contrary to popular belief, isn’t just for the wealthy. In fact, this is a common misconception we’re keen to address. No matter what your financial goals are, or how limited your budget is, investing your money is still one of the best ways to earn a return in the long run. When it comes to investing, there’s no need to wait until you have a certain amount of money set aside—there’s no better time to start than the present!

Here are a few key tips for investing when you have limited means.

1. Decide on a budget for investments

Many people make the mistake of deciding to invest whatever money they have left at the end of the month (if there is any). With this approach, it’s almost impossible to predict how much money you’ll be able to devote to your investments, and you may not end up investing at all. A better strategy is to take stock of your finances and determine a suitable budget to start investing. This budget can be weekly, monthly, semi-annual, etc. The important thing is that it’s in proportion to your income.

For example, if you have a stable salary, you can set up recurring, automated transfers. This way, a predetermined amount, say, $75 dollars from each paycheck gets invested. Think of it as an essential expense like paying a bill.

If you aren’t employed, but you still receive income (unemployment benefits, etc.), you can use the same approach, but adapt the amount you set aside in proportion to your income. Ultimately, the goal is to be able to invest without cutting back on your essential expenses. Keep in mind that you can start investing with as little as $20 a month.

Speaking of monthly budgets, this brings us to our next tip.

2. Track down any unnecessary expenses

Minor expenses really do add up. From online monthly subscriptions to food delivery, coffee, and the latest trendy smartphone, many expenses are unnecessary  and can cut into your budget for investments. Conducting an audit to identify what you can reduce might be tedious, but it’s critical. Get honest about what you truly don’t need—be it new clothes or eating out—and you’ll be able to figure out how much you can realistically put aside each month. You might only have a few extra dollars to invest, but in the long run, those few dollars make a big difference.

3. Bet on Exchange-Trade Funds (ETFs) 

Buying stocks can be expensive. This is why exchange-traded funds (ETFs) are an easy and affordable way to get started. An ETF is a collection of stocks and/or bonds. You can buy an ETF just as you would stock. However, when you buy stock, you’re investing in one company, such as Tim Hortons or Amazon. When you invest in an ETF, you’re investing in multiple stocks or bonds that follow a specific investment strategy. For example, some ETFs may track a stock index (like the FTSE Canada Index ETF, which invests in the largest Canadian stocks). Or, an ETF may track an index for a particular industry, such as technology or healthcare. By investing in ETFs, you can effortlessly benefit from the performance of all the companies involved. 

4. Be confident in your ability to invest

A final key tip for investing on a small budget is to have confidence in yourself. It’s tempting to give up before trying, especially when resources are limited, and your idea of a successful investor is a professional in a suit who studies the markets every day. Remind yourself that investing is for everyone, and that you can invest as little as a dollar. What matters above all is your long-term investment vision. The longer the term, the more likely your money will grow. 

At the core, investing is all about one thing: letting your money work for you!