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Saving vs. investing: What’s the difference?

Sometimes “saving” and “investing” are used interchangeably, but they’re two completely different concepts. And choosing one or the other can impact your long-term financial situation significantly.

What is saving?

Saving means simply putting aside part of your income. Instead of spending everything  you earn, you set aside a certain amount to use later. There are different ways to save, but the most common is to put your money in a savings account in a bank. There is no risk to save—your money will be there whenever you want to withdraw it!. 

However, it’s important to know that in 2021, the annual inflation rate is around 1.1% on average, but interest rates for savings accounts usually range from 0.75 to 2%. Essentially, this means that the interest you could earn on your savings may not  compensate for ever increasing prices (or inflation!).

If your savings are intended to finance a short-term goal, such as taking a trip or buying a new car, annual inflation doesn’t pose much of a problem. It’s when it comes to long-term saving plans—financing the purchase of a condo, for example—that you might end up losing purchasing power.

What is investing?

To put it simply, investing means acquiring assets (stocks, bonds, property, real estate, etc) that have the potential to increase in value over time. In this case, the point is to get a return on your investment. The money deposited in a savings account earns very little, while a smartinvestment allows you to grow your money much faster. Of course, the amount an investment earns during a specific time period (or yield rate) will vary depending on the type of investment, and there is also a risk that your investment may not see any returns. 

What’s the fundamental difference between the two?

From a strictly economic point of view, saving is simply the money you don’t spend. The money you save is also  liquid, meaning it’s  available immediately. 

Investing, on the other hand, is about using your money to generate a profit. Usually this is done with a long-term plan in mind. 

Saving can be seen as a safety net that can be used to deal with the unexpected expenses that arise in life. If your car might break down or you owe money on your tax return, your savings can help you stay out of debt. A good rule of thumb for emergency savings? Aim to have the equivalent of 3 to 6 months of expenses set aside, so you can cover rent, groceries, utilities and all the other basics even if you suddenly lose your income.

If saving is a safety cushion, investing is the entire couch. Money that’s invested in the medium- and long-term is what generates a profit and can make it possible to improve your quality of life and set you up for retirement. 

Making the choice between saving and investing is a question of your needs and personal preference. Your goals, risk tolerance, age and financial situation, such as whether or not you’re in debt, can help inform your choice. Getting advice from a financial advisor will help you make cents of your situation. What’s certain is that it’s never too early (or too late!) to start investing.

Give me an example!

Take Peter and Chloe: they each have the same profession and earn a salary of $40,000 dollars a year. Every year, Peter and Chloe both save 20% of their salary, or $8,000.. While Peter puts his money in a savings account, Chloe invests her savings.. Peter’s savings account earns 1% per year, while Chloe’s portfolio earns 5%. What happens after 40 years of working? Chloe will (potentially) have accumulated $694,718 in compound interest, while Peter will have only accumulated $75,001.90, even though he is earning the same salary and putting exactly the same amount aside!

It really makes you think, doesn’t it?

Invest smarter Investing

Investing early: Why it’s the smartest thing you can do

Read on as we break down how investing even a small amount early on can lead to far greater rewards than waiting to invest. But the biggest takeaway if you stop reading now? Regardless of your age, there’s literally no better time to start than right now. Not tomorrow. Not next week or month or year. Now (or yesterday if you figure out time travel).

To understand why investing early matters, it helps to understand interest. 

What is interest? 

You invest money by sending it off into cyberspace. But then what? It’s not as mysterious as it seems. That money goes to companies that use your investment to grow their business.

Interest is the money you’re paid for letting those businesses use your money. There are several ways interest is calculated. Simple interest calculates interest only based on the original amount of money that you invested or borrowed, also known as the principal. To calculate simple interest, multiply the interest rate by the principal by the given time period, usually in days or years. This type of interest usually applies to automobile loans or short-term loans.

Let’s say you invest $1,000 in a one-year GIC with a simple interest of 3% per year. The interest you earn after one year would be $30, growing your total investment to $1,030. Let’s say you decide to keep your money invested in the GIC for a total of 5 years, then you would make  $150 in interest over that period.

Here’s where interest gets more interesting…

Introducing compound interest

Compound interest is like an avalanche only far more positive: your money may start small, but as it rolls down the hill (in this case, the hill is time), it becomes bigger and bigger. 

When it comes to your money, you want the biggest hill. And the earlier you start, the bigger your hill.

Unlike simple interest, compound interest is calculated based on your principal and the interest earned from previous periods. In other words, it includes interest on interest. 

Let’s use the same example above except this time you invest $1,000 in a 5-year GIC with a compound interest rate of 3% per year. After the first year, your investment will gain $30 in interest. However, by the fifth year your investment will have gained $159 in interest, making you $9 more than with a simple interest investment.

That $9 may not seem like a huge difference, but the more money you invest (your principal) and the more time you let it sit (your hill), the more opportunity you have to earn interest and for that interest to grow. It can mean the difference of thousands of dollars, or more.

It’s worth remembering that compound interest can also work against you in certain situations, such as when you carry credit card debt, but it’s all upside when it comes to investments. Compound interest and your investments are a match made in heaven.  

Do the math (or let a calculator do it for you)

Unless you liked math growing up, you may be tempted to skip over this. But trust us: you’re going to wanna see how compound interest shakes out.

One of the best ways to visualize the power of compound interest is through the classic checkerboard math problem. Take a checkerboard and place one penny on the first square. Then two on the second. Four on the third, so on and so forth, doubling the amount of pennies on the square each day. How much money would you have by the last square?

It’s more than you may think. By square 64, you’d have: $184,464,625,987,328,000.00. We’re not even sure what the heck that number is.

Now, we’re not suggesting you double your pennies every day. But, you can use a compound interest calculator like the calculator from the Ontario Securities Commission to see how time and consistently saving can exponentially increase your money.

Say you start with a $100 investment and decide to add $10 to your account each month beginning at age 25. And then you wait to use that money until you’re 65 years old. Using a 5% interest rate compounded annually, you’ll have earned $10,629.24. 

If you make these same investments, but start at 35 (so, you have 10 fewer years for your money to grow), you’ll have earned only $4,885.95 in interest. 

Let’s be clear: it is never too late to start investing. Putting aside money for your future is smart, no matter when you start. However, do a little math and you’ll quickly realize that it pays to start as soon as you possibly can.

Increasing the amount you’re contributing to your investments can also have a major impact on your money’s growth. 

If you feel strapped for cash, you may want to dig in a bit deeper. What would it mean to pay $10 less per month on your debt and invest that $10 instead? You’ll have to do a bit more math to see if it makes financial sense for you. It may, especially if you have a loan that has a lower interest rate than the expected average annual returns of wherever you’re investing your money. 

Just think: you owe $1,000 on a loan that has 4% interest. That may mean you owe $40. But if you can invest $1,000 in an investment that has an average of 10% returns? You can make $100. Which covers the cost of interest, plus $60.

And when your avalanche gets moving, it gets moving. You’re going to need an avalanche beacon to locate your principal. “I invested this and it’s now this?” Yup, a little now can go a long way by the time you’re set to tap into that sweet, sweet cash avalanche.

Moka can help you start investing with your spare change. Download the app to get started and Moka will round up your purchases and invest the difference. 

Get ready to watch those pennies add up.

Invest smarter Investing

COVID-19: Is now the time to invest?

We can all agree COVID-19 turned our worlds upside down. From being confined to our homes to many people losing their jobs, it has been a period of uncertainty for many of us. But was it a time to invest?

When we aren’t sure about what’s ahead, it’s tempting to be cautious with our money and avoid risk in these uncertain times. But, the temptation to err on the side of caution and avoid risk can actually hinder rather than help your financial future. Flashback to the beginning of the pandemic when Canadians started stockpiling (remember the great toilet paper rush?). By the end of the year, the average household savings was about 15% – that’s higher than the previous seven years combined. And the result of those combined savings? As much as $100 billion, or about 6% of the country’s GDP! 

So now the question is what should Canadians do with all that savings? It’s tempting to be careful, but as it turns out, if you have money, a crisis is actually a good time to invest.

A crisis is (almost) always followed by a rebound

In a crisis, our natural reaction is panic. Not to go too Freud, but we close ourselves off, avoid risk and seek security. It’s normal. But fear is rarely the best advisor. 

With stock prices tied to major world events and the overall global economy, it’s not surprising that COVID-19 has had a huge impact on markets – for better or for worse, depending on the industry. But when it comes to investing, it’s the long-term that counts. So there’s no point panicking when prices dip or the media (yet again) predicts impending doom. When financial markets go down, it’s generally likely they’ll go back up again within months – or even weeks – especially since there’s often a post-crisis rebound to come. We can already see the markets bouncing back over the past year after the pandemic started. All it takes is a little patience.

That’s why it’s important to keep in mind that prices are just a snapshot of a specific moment in time. Like viral videos that fade into the digital abyss, stock prices tell us nothing about what will happen in the future. 

To put it in a slightly more, well, historical perspective, past crises (like the 1929 stock market crash and the 2008 economic crisis) have almost always been followed by rebounds. Markets are cyclical; after falling, they rise. And the rise can be big. After the 2008 crisis, the American stock market bounced back by more than 320%!

That said, staying calm in a crisis is easier said than done, we know, so if your emotions do tend to overwhelm you, check out this article on behavioural finance and why investors are their own worst enemies.

Now’s the time to think about the future

If the pandemic has proven anything, it’s that we don’t know what’s going to happen (even though, on average, we can expect periods of positive growth to be longer and bigger than periods of negative growth). So safeguarding your future by putting money aside is important. But rather than just saving, it makes more sense (and cents) to invest.

Why? Because unlike savings, investing comes with opportunities for returns. Imagine that you put $100 in a savings account with a 1% interest rate. After a year, you’d have $101, but as prices rise with inflation, suddenly that $101 might actually buy less than your original $100 would have bought. Investing, on the other hand, gives you a potential return (aka “a gain”) that can cover the increase in prices. Yes, there’s always a chance you’ll lose money with investing, but in the long term, it very often means more profit, while savings can reduce your buying power. 

Certain sectors are seeing an upswing

We all know that some industries have been hit harder than others, like the hospitality and cultural sectors. So while it might not be the best time to open a restaurant or launch a theatre company (though some people would disagree), some industries – like digital technology, health and sustainable development – haven’t just been spared, they’re on the rise. Meanwhile, Socially Responsible Investments (SRIs) have proven resistant and performed even better than traditional funds!

What’s the lesson? The economy isn’t all or nothing. When some sectors suffer, others will thrive, meaning a crisis can still be a great time to invest. The most important part of any investment is the purchase price – as prices go down, it’s an opportunity to buy low, with a long-term plan of taking advantage of the market rebounding, all while minimizing risk. 

The investments you make during a crisis will work in your favour … as soon as the market recovers. 

Save more

3 ways to save money without a budget

How much did you spend last month? For those of us who want to save money, knowing the answer is essential.

And we’re not talking ballpark. Or being $200 off and thinking “close enough!” We’re talking down to the cent. Most of us should know the answer. However, many of us just think we know the answer. 

Here’s the thing: if you want to save money, you can’t kind-of sort-of know the answer. You need to know exactly where your money is going every month.

We check our social media accounts 500 times a day. Why shouldn’t we give our money even a fraction of that attention? Use these three steps to start saving now.

Check your income vs. your expenses

Every financial check-in needs to start with a baseline. How much are you spending and where are you spending it?

Knowing where every cent (yup, cent!) is going will help you identify areas where you can redirect your income towards your savings goals. Track your expenses for several weeks (or even a couple of months) to see if there are any trends. A simple spreadsheet works, or use an app like Mint. Then, highlight specific purchases or note entire categories (travel, restaurant, auto, etc.) where you may be able to cut back.

You may want to separate your musts (rent, insurance, groceries) from your nice-to-haves. Can you commit a monthly amount ($10, $20, $100, whatever it may be) to your savings and add that to the “musts” category? What would you need to adjust in the nice-to-have category?

Even if you are a budget-y person, you still want to track your actual spending. 

Automate your must-pay bills

There’s nothing worse than fees or interest when you don’t actually need (or want) to pay it. And who wants to pay money if they don’t have to?

Automating your monthly expenses, such as phone, internet, and other must-pay bills helps ensure you pay for your expenses on time and before you spend money on the more fun—a.k.a. unnecessary—expenses. Paying the expenses on time, and not having to stress about it, will give you peace of mind and reduce the chance that you’ll be whacked with any late fees or interest.

Of course, automation isn’t for everything (see below re: pesky recurring subscriptions), but when it comes to your monthly must-pay expenses, it’s worth considering.

Add everything to your calendar

In the age of monthly subscriptions and auto-renewals, it’s easy to have many what-the-heck-is-this-charge moments. That streaming service “free trial” that required a credit card. Digital magazine subscriptions you stopped reading. Auto insurance that auto renews.

Pull up your calendar. Add any recurring payments, and add a reminder at least a week before your subscription is set to renew. Heck, set multiple reminders if it’s helpful. The reminders will give you time to evaluate whether you’re still using the subscription, need to cancel, or want to change it.

While you’re at it, include all the automatic payments you just set up. You’ll want to check on them each month so you can catch, and address, discrepancies as they arise. There’s nothing worse than trying to dispute a double charge from a restaurant—that you ordered from 10 months ago.

Bonus tip: Reach your savings goals even faster by ramping up (or starting) your investing. Moka makes it simple to invest your spare change by rounding up your purchases—including those automated must-pay bills (see step 2, *cough cough*). Can your piggy bank do that?

Even if you make small adjustments to your finances, they can have a major impact and help you save money in the long run. Next time you’re scrolling through your socials, take a few minutes to check in on your finances. You’ll be able to go over your income and your expenses, including recurring payments and make any necessary adjustments to keep your savings goals on track.

It turns out, every cent really does add up.

Invest smarter Investing

Ready to start investing? Here’s why ETFs are perfect for you.

Whether you want to retire before 50, take that big trip to Bora Bora (whenever we can do that again), or achieve any other financial goal, you know investing is the not-so-big secret. 

But investing can be overwhelming if you’re just getting started. How do you know what stocks to buy? How do you buy stocks if you only want to invest a little bit at a time? 

If you’re considering investing for the first time, exchange-traded funds (ETFs) are an easy and affordable way to get started. And you don’t have to be an expert investor to make it work for you.

Start investing in ETFs today!

Moka makes it easy to invest in a fully-managed, diversified portfolio of Exchange-Traded Funds or ETFs.

What is an ETF?

First things first: 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 tracks the performance of the FTSE Canada Domestic Index and invests in the largest Canadian stocks). Or, an ETF may track an index for a particular industry, such as technology or healthcare. 

An index measures the performance of a group of stocks or bonds. So, a technology index may include Apple, Microsoft, IBM, and others. The ETF attempts to meet or exceed the performance of the index.

Why invest in ETFs vs. stocks?

While you can buy ETFs and individual stocks, there are several upsides to investing your money in ETFs—especially when you’re just starting out. 

Low investment amounts. One of the biggest reasons ETFs are better than stocks for new investors is because they make it easier to start investing with less money. Some stocks cost several hundred dollars for a single share. With an ETF, you can invest smaller amounts and not face tons of commissions and other fees.      

Risk management through diversification. One of the keys to success as an investor is diversification. The basic concept behind diversification is simple: don’t put all your eggs in one basket. With your money spread across several stocks and bonds, there’s less risk involved. 

If you invest in one stock, your investment would lose a lot of value if the stock price plummets. (All your eggs are in one basket, so you’re in trouble if you drop the basket!)       On the other hand, if an asset in an ETF underperforms, other assets can make up the difference. One ETF is many baskets.     

That said, it’s still possible to take risk with ETFs. If you have a higher risk tolerance, you can opt for a portfolio of ETFs that takes a more aggressive investment strategy.           

Simplicity. With ETFs, you don’t have to be an investment pro to succeed (even seasoned investors have a hard time beating the market by picking stock). If you don’t have the time to understand which specific stocks make most sense for you—and who really does?—investing in an ETF is a much easier decision that can pay off in the long term.           

Performance. ETFs generally follow the index they’re tracking. Over time, their returns will be similar to the index. For example, someone who invested in the FTSE Canada Index ETF at inception in November 2011 would have seen an annual compound rate of return of 7.27% by the end of 2020.

In fact, ETFs can outperform stock picking over time. Some stock pickers largely outperform passive, index investing strategies, but in general, over longer periods of time, passive index ETF investment will outperform. This is especially true for non-professional investors: you’re more likely to see better gains in the long term if you go the ETF route over trying to manage your own portfolio!

So, if you don’t have a bajillion dollars to invest in pricey stocks managed by a pro (and who does?), but you still want to make progress toward your financial goals, you’ll want to consider ETFs.

Ready to start investing in ETFs today?

There are lots of ways you can get started. If you’d like to open a fully-managed, diversified investment portfolio, Moka might be the right fit for you.     

Moka portfolios are a mix of four Moka funds:

  • Three funds are entirely ETFs.
  • The fourth fund is designed for people who may need to quickly convert their investment money back to cash. This fund is a mix of ETFs, guaranteed investment certificates (GICs), money market instruments (such as treasury bills), and cash.

The mix of funds in your portfolio will depend on the strategy we select (we’ve got options ranging from conservative to aggressive) to support your goal, financial profile and risk tolerance, and whether or not you’ve selected socially responsible investing.

And with Moka, you don’t need a bag full of cash to get started. Moka will round up your everyday purchases to the nearest dollar and automatically make the investments.

Download Moka to start investing in ETFs today.

Disclaimer: The views expressed in this story do not constitute financial advice.

Letter News

Moka is joining forces with Mogo

Today is a day to celebrate. For Moka’s loyal community of users in Canada and abroad. For our dedicated team and investors. For the fintech ecosystem and for anyone who is looking for a simpler, smarter, and more powerful way to achieve their financial goals. Today’s announcement is a giant step in the right direction. 

Moka will be acquired by Mogo

I’m thrilled to announce that Moka is joining forces with Mogo Inc. (NASDAQ: MOGO) (TSX: MOGO) in an acquisition that will create the most comprehensive consumer-facing fintech company in Canada. This deal will allow us to help even more people realize their financial dreams and it will improve the services that we can offer to our existing customers, who can continue to use the Moka app as usual.

Moka started with a mission to help people

In 2016, we set out to help Canadians achieve their financial goals by making it easy to save and invest. Our original round-up and invest feature makes it effortless for anyone to grow their wealth, with no financial knowledge or minimum investment required. We’ve grown a lot since our first app release. Most recently, we launched Moka 360 to help Canadians discover more money in their daily life and we expanded to Europe by launching in France. But our vision and our mission don’t stop there.

Everyone deserves a platform that makes managing their personal finances easier, more affordable, and more accessible. By combining technology, data and human ingenuity, Moka helps people live their best life and accomplish things that were previously out of reach, like buying a home, paying off debt, travelling the world, having a family, or saving for retirement. 

Everything we do is driven by our mission

Over the past five years, our mission has been at the heart of everything we do. Our decision to partner with Mogo is a huge step towards achieving that mission because the Moka and Mogo teams share a common purpose: we help people manage their money better. That’s why we’re so excited to join their family. 

For Moka and our community, this merger is a big win in three ways:

Firstly, I love Mogo’s innovative and diverse products and I’m confident they’ll benefit our Moka community. From digital spending accounts to automatic carbon offsetting, to bitcoin investing, and more, Moka users will soon have access to an even wider array of intuitive and affordable services.

Next, as part of a large, publicly-traded company in Mogo Inc., Moka can focus on innovation and on delivering the best possible customer experience — a freedom that most startups can’t usually afford.

Lastly, by uniting our companies’ expertise and technologies, we’ll create powerful synergies that will let us execute better and faster for you.

Our mission remains unchanged, but now we’re empowered to do more, faster

While we celebrate today, we know that this is only the next chapter in our journey. We have a lot of work to do, together, to build a future where financial technology can truly help everyone live their best life.

We could not have gotten this far without the unwavering support and dedication of our teammates, investors, families, partners and, most of all, our loyal customers. I can’t thank you enough for the trust you’ve placed with us, and we remain committed to our promise to you.

We look forward to innovating and building products and experiences that will inspire you and improve your life.

If you aren’t yet part of this journey, but what I’ve said above resonates with you, why not come along for the ride? We’re going to some pretty amazing places! 

Excited for today and the future,


Philip Barrar

Founder & CEO, Moka

Questions about our news? Check out our Help Centre!

Letter News

Introducing Moka: Why Mylo is rebranding

If you’ve downloaded the newest version of our app or visited our website recently, you’ll have noticed a big change: we rebranded!

I’m thrilled to introduce Moka, the new and improved Mylo.

Since launching in 2017, our automated saving and investing app has been downloaded by over 750,000 Canadians in every province and territory, and we’ve helped our users save and invest to achieve goals like celebrating their marriage, buying a house, starting a business and preparing for retirement.

And we’re just getting started! This year, we’re focusing on evolving our product beyond investing spare change and expanding internationally to Europe, so we needed a name that resonates around the world in every language and country.

We loved being Mylo and we’re proud of everything we’ve accomplished as a company and for our users with this name, but we are excited to announce a new name that will better serve our growing global community and our mission to help you achieve your financial goals. 

Meet Moka

There’s this myth that millennials are struggling financially because they’re buying lattes and avocado toast, but that just isn’t true. We are facing different financial challenges than our parents’ generation, so we need different financial services. We’re not looking for a lecture from a financial advisor: we want better technology and tools that can empower us to save and invest more. 

That’s where Moka comes in. The app doesn’t dictate what you can or can’t do with your money. Instead, Moka lets you live the life you want today while building towards an even brighter future. 

The way it works is simple. You tell Moka what you want to do and the app will show you how to achieve it. The app kick-starts your personal finance goals, and it makes saving more, spending less and investing smarter a daily practice. Moka gives you the power to accomplish great things.

How will this change impact Canadians?

Along with our new name, we’re also launching a fresh new look and refreshing our features so you can get #morewithmoka. We’re enhancing the app to help you keep more of your hard earned money, which is why our new logo shows a coin landing in an open hand. (To see Moka for yourself, make sure you download the latest version of the app!) 

Our name and visual identity have changed, but we’re still passionate about helping you achieve your financial goals. Moka, like Mylo, exists because of the people who use our app, because of you. In fact, we’re working on some innovative new features that will help you reduce expenses, pay down debt and save more when you spend. We can’t wait to tell you about them soon!

If you have any thoughts or questions about our rebrand, we’re always happy to hear from you. 

Thanks for using Moka!


Philip Barrar

Founder & CEO, Moka


What to do if you’ve just lost your job

Losing your job is never easy, but you’re not in this alone. Here are some simple steps to help you set up your finances for the months ahead. 

1. Apply for benefits

Some good news: you are very likely eligible for financial aid. Start by applying for the Canada Emergency Response Benefit (CERB), which will give you $500 a week for up to 16 weeks. You should apply for the CERB even if you’d normally qualify for Employment Insurance. 

In addition to the CERB, check the Benefit Finder for pre-existing resources and see what additional programs are being provided by your province. To help you navigate your options, we put together a comprehensive resource of the federal and provincial support programs that are available. 

2. Review your finances

Now that financial support is on the way, it’s time to take stock of your current situation. How much money do you have saved or invested? Is it enough to cover your immediate expenses? Are there any unnecessary expenses you can cut? 

Updating or creating your budget will help you answer these questions and plan for the coming weeks. If you’re short on cash, we recommend dipping into your savings and investments before taking on new debt. If you really need to borrow, read our guide first.

3. Pick up the phone

Need to stretch your money? You may be able to reduce or defer upcoming expenses like monthly bills, debt repayments and rent. Companies all across the country, from banks to mobile providers, have responded to the crisis with financial relief measures for Canadians in need. Contact your service providers to discuss your options, even if they haven’t made any official announcements. 

Prioritize penalty-free deferments and payments on loans that will not accrue interest, such as most government-issued student loans. Deferring other debt repayments could affect your credit score or result in additional interest charges, so only defer these as a last resort.

Here’s a list of providers to contact:

  • Your phone and Internet provider 
  • Your cable TV provider 
  • Your utility providers (both hydro and water)
  • Your insurance providers (car and home)
  • Your landlord or mortgage provider
  • Your credit card company 
  • Your student loan provider
  • Any other creditors

4. File your tax return

The deadline to file income tax has been pushed back to June 1, 2020, but the sooner you file, the sooner you’ll get your refund. More than two-thirds of Canadians will receive an average refund of over $1,700, which is money that can go towards paying expenses or topping up your emergency fund. 

If you’re concerned about potentially owing money, don’t worry. The payment deadline has also been extended. You’ll have until September 1, 2020 to pay off any balance owing. 

5. Stay connected

While you’re getting your finances in order, it’s a good idea to start reaching out to your professional network about new opportunities: many industries are still hiring. To improve your chances of landing a job, do (virtual) practice interviews with a friend and update your resume, website and LinkedIn profile. This may also be a good time to expand your job options by learning a new skill online.

Handling the loss of a job can be challenging, especially now, so be kind to yourself and connect with your family and friends as much as you can. We may be practicing self-isolation, but we are all going through this together. Our Customer Success team and Portfolio Managers are also here to support you through this challenging time and whatever lies ahead. 

Get financial advice

Need personalized advice from an expert? We each have unique financial situations, and there is no “one size fits all” solution for finding ways to overcome the financial challenges that may lie ahead. We recently rolled out a new service that allows you get financial coaching in the app, and we’re hard at work expanding our capacity to offer it to all of our users.

This feature gives you access to real-time live chat with an expert financial advisor who can answer any questions that you may have about your personal finances and help you make the best possible financial choices. Join the waitlist today


The smart way to borrow money in an emergency

Need money now? If you’re in a tight spot because of COVID-19, you’re not alone and help is available. Here’s everything you need to know.

Before you borrow

Remember: Borrowing usually costs money, so only take on debt as a last resort and borrow as little as possible to minimize interest charges. Before borrowing, make sure you’ve reduced your expenses, accessed any available savings or investments, explored ways to supplement your income and exhausted all financial aid options.

Your borrowing options

In general, the lower the interest rate on the loan, the better. Fees, the repayment period and availability are other important factors to consider. Here are the options that we recommend, listed in order of preference:

Loans from family or friends

We know this isn’t possible for everyone, but if you’re lucky enough to have someone who can help, reach out. These loans usually come with a very low (or zero percent) interest rate, no fees and flexible repayment terms, which make them the best option for borrowing money. 

Mixing money and personal relationships can be tricky, though. Here’s some guidance on how to respect and protect relationships when borrowing from a loved one.  

Home Equity Line of Credit (HELOC)

If you have access to a HELOC, then this is probably the next best option. This flexible, low-interest loan uses your property as collateral and allows you to borrow up to a pre-set amount. You only borrow what you need, and you only pay interest on what you use. Since it’s a secured loan, interest rates are usually lower than regular lines of credit.

Opening a new HELOC can take time and cost money, so it’s likely not the right choice if you need cash immediately. But if you’re a homeowner with 20% equity in your home and you can afford to wait, the low interest rate makes it worth considering, especially with the recent rate cuts by the Bank of Canada.

Unsecured line of credit

An unsecured line of credit is a smart choice if you don’t already have a HELOC or real estate to borrow against. Since this kind of loan doesn’t require any collateral, it’s generally quicker to set up and easier to access. Interest rates vary but generally fall somewhere between HELOC and credit card rates. You’re more likely to get a favourable rate if you work with your current bank, and they may even be willing to transfer overdraft fees from your existing chequing account to your line of credit.

Low interest credit cards

If you don’t have access to a line of credit, a credit card may help with cash flow. The big six banks are offering to lower interest rates for anyone who has been approved for payment deferrals. Interest rates will likely still be above 10%, so be careful about how much you put on your card.

Use a comparison tool like RateHub or LowestRates to find the best low fee, low interest credit card for you. If you have existing credit card debt, look for a card with a 0% introductory interest rate on balance transfers, like this one. There may be a fee, but you’ll still save money by not paying interest on pre-existing credit card debt during the promotional period. Also, be sure not to use cash advances from your credit card, as these often have a much higher interest rate than the standard annual interest rate promoted by the credit card issuer.

What to avoid 

We recommend that you stay away from payday loans, RRSP withdrawals, and tax refund loans. Here’s why.

Avoid payday loans at all costs. We repeat: Avoid payday loans at all costs—especially in the current environment. As the name suggests, these loans are short-term advances for money that’s coming on your next payday. If you’ve lost your job and don’t have work lined up, the high fees and interest rates could make a payday loan very expensive. It might not seem that expensive in dollar terms if you only borrow for a few days, but the effective interest rates charged can be as high 500 to 600%.

A tax refund loan, or short-term advance on your estimated tax refund, might seem like a good idea, but we don’t recommend it. There may be high fees associated with this service, and you could end up owing money if your estimate is incorrect. 

Don’t make an RRSP withdrawal. There are penalties associated with making early withdrawals from your RRSP and any money you withdraw is considered taxable income. You’ll also permanently lose the contribution room.

Get financial advice 

Ultimately, the smartest option for borrowing money is the one that works for you. We each have unique financial situations, and there is no “one size fits all” solution for finding ways to overcome the financial challenges that may lie ahead. We recently rolled out a new service which makes it possible to get financial advice in the app, and we’re hard at work expanding our capacity to offer it to all of our users.

This feature gives you access to real-time live chat with an expert financial advisor who can answer any questions that you may have about your personal finances and help you make the best possible financial choices. Join the waitlist today


Managing your money during uncertain times

Most of us will be financially impacted by COVID-19. The challenges and uncertainties created by the pandemic mean that making the right financial decisions, a complicated task even at the best of times, is currently even more difficult.

We’re here to help with expert recommendations on what to do with your money right now and how to prepare your finances to weather the storm.


In the past 2 weeks, equity markets have taken a tumble, putting an end to a historic bull market. As of March 23, the TSX (Canada) and the S&P 500 (United States) were down 37% and 34% respectively from their peaks a little over a month ago. 

Perhaps you’ve seen your portfolio diminish as a result, and you’re wondering if it’s time to cut and run. While these concerns about your investments are understandable, our best advice to you is to keep calm and stay the course.

Stay the Course

We recommend leaving your money in your investment accounts if you can afford to do so. In a cash crunch, you can always access your money if you need it using Moka’s next-day withdrawal feature, but wherever possible, we suggest using emergency savings and reducing unnecessary expenses before tapping into your investments.

Ultimately, history has shown us that over time, the equity markets should recover and grow. Withdrawing your money now locks in any short-term losses and prevents you from benefiting from any future gains when the market recovers.

If you have short-term goals with Moka, like going on a trip, your money is likely invested in a Conservative portfolio, which means that you have very low exposure to equity markets and are much less likely to be significantly impacted by market volatility.

If you have long-term goals, like saving for retirement or for a young child’s college education, then you have time to ride out short-term market fluctuations.

However, if you feel that your current portfolio does not accurately reflect your risk tolerance or current financial situation, we’re always available to you. Your dedicated Portfolio Manager will be happy to review it with you or answer any questions.

You can also refer to our previous article about this here.

The Road Forward

We recommend continuing to regularly save and invest towards your financial goals if you can. 

By contributing to your savings goals on a weekly basis, you’re taking advantage of an important concept called Dollar Cost Averaging. Basically, buying into your portfolio gradually and consistently minimizes the impact of market volatility.  

Moka portfolios are balanced weekly. We tend to buy stocks less when the market is outperforming and more when it’s underperforming, which means that your portfolio is taking advantage of the market conditions at different points in time.

Don’t forget that you can always edit the funding rules for your goals in the Moka app, depending on your cash flow needs and spending patterns. Since most of us will be self-isolating for a  while, we might see our roundup contributions decrease. We suggest setting up or increasing your recurring deposits to stay on track with your goals. Of course, you can also reduce your contributions if your financial situation requires it. 

Moving the Goal Post?

It’s never a bad time to be investing towards your future financial goals, but it’s understandable if saving for things like a vacation or a new car is suddenly less of a priority.

Regardless of changes you may be making to your financial goals, we think everyone should have an emergency fund to help weather any unexpected financial situations without going into debt. If you don’t already have one, make sure that an emergency fund goal is at the top of your list.

If you do have an emergency fund, whether it’s in a Moka account or somewhere else, don’t be afraid to rely on it if you’re experiencing a cash flow crunch. It’s there to help you through times like these.

Saving money in a financial downturn

With many people facing a loss of income due to business closures, reduced hours, sickness and quarantine, and a recession on its way, every dollar counts and it can be even harder to put money aside. Here’s what you can do to ensure you’re still making progress towards your savings goals.

  • Prioritize your emergency fund.

I know, we’re repeating ourselves, but only because it’s probably the most important point in this article. Experts recommend having an emergency fund that can cover 3 to 6 months worth of expenses. It’s OK if you don’t already have one, or if saving that much  isn’t possible for you, right away. The important thing is to put aside whatever you can, as soon as you can.

Keep your emergency savings in a separate account from the one you use for day-to-day transactions. By putting your savings in a Moka account, you can easily add to it automatically and still access your money in a pinch with next-day withdrawals.

  • Make a budget. 

It’s time to prioritize your expenses and savings and reduce unnecessary spending. Even if you already have a budget, consider creating an emergency budget that cuts out even more non-essential items. See our guide on how to create one in three easy steps. You can also use an app like YNAB.

Don’t forget to factor savings into your budget. After calculating your expenses, see how much you can afford to put aside each month and then automate the process. By ‘setting and forgetting’ recurring deposits, you’ll have an easy, stress-free way to ensure that you’re saving consistently.

  • Track your spending.

Telling your money where to go is one thing. Seeing where it’s actually going is another. While it’s possible that you’ll spend less money during self-isolation, it’s also easy to overspend on things like online shopping, digital subscriptions and restaurant deliveries. Tracking your spending will allow you to stay on budget and easily identify when and where you need to cut back if you veer off track. 

If the thought of writing down every dollar you spend seems tedious, download an app like Mint or Wally to do it automatically.

  • Identify all opportunities to save.

Take some time to go through your expenses. Are there any subscriptions or memberships that you’re not currently using? Are you spending too much money on services like your cellphone? Can you call and negotiate your bank fees? You might be surprised to find how much money there is to be saved. 

  • Renegotiate or renew your mortgage.

Canada’s major banks have dropped their prime rates by a full 1 percent in the last two weeks, following rate cuts from the Bank of Canada. We recommend speaking to your mortgage broker to see what these new rates mean for you and if you’re in a position to capitalize on them. Keep in mind that if you’re breaking your existing mortgage early, you may need to pay a penalty, but depending on the improvement in your new rate, it could be worth it.

  • Apply for any benefits or financial aid you’re eligible for.

The Canadian government has put in place a huge aid package to support Canadians impacted by the pandemic. Research what you qualify for and submit your applications as soon as you can. Don’t be discouraged if processing times take longer than usual. The main thing is to make sure you take whatever action is required. 

New information is being released constantly, and the team at Moka will do our best to help you navigate them. See our roundup of what’s been announced to date.

Managing Debt

  • Keep on top of your debt payments, if you can.

If your financial situation allows, we recommend continuing to pay off your debt so that you don’t negatively affect your credit score or accrue any additional interest.

If you’re using a credit card, aim to pay it off in full each month if you can afford to. And keep an eye on your transactions—more online purchases during self-isolation could mean that your credit card bill is higher than it usually is.

  • If you can’t keep up with your payments, check what support is available and contact your creditors.

Limited cash flow means that many Canadians may struggle to keep up with payments on their mortgage, credit card or student loans during this crisis. 

Luckily, there’s support available.  

Canada’s big six banks have announced that they will provide flexible payment arrangements. Contact your bank as soon as you can to see if you are eligible for deferred payments on your mortgage and/or credit card debt. Be aware that you are still required to pay interest on your deferred payments, so you may end up paying more in interest payments as a result.

For students, the Canadian government has paused the repayment of Canada Student Loans and Canada Apprentice Loans for six months until September 30, 2020. Some provincial governments such as Quebec and Alberta have also announced similar measures. 

Stay tuned for additional measures. As mentioned, we will do our best to keep you updated.

  • Don’t take on more debt, unless you really need to.

While we understand that this won’t be possible for everyone, our advice is to reduce your expenses and access all available support before taking on more debt. Please also do not take on extra debt to cover the costs of unnecessary bulk buying. 

We may be feeling the financial impact of COVID-19 for a while. Good financial health and habits are more important now than ever.

Get financial advice

We each have unique financial situations, and there is no “one size fits all” solution for finding ways to overcome the financial challenges that may lie ahead. We recently rolled out a new service that will make it possible for you to get financial advice in the app, and we’re hard at work expanding our capacity to offer it to all of our users.

This feature will give you access to real-time live chat with an expert financial advisor who can answer any questions that you may have about your personal finances and help make you make the best possible financial choices. Join the waitlist today